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Draft law regulates Government management of State companies

Update: April, 16/2014 - 10:07

National Assembly deputy Tran Du Lich told Tien Phong (Vanguard) about new changes to the Law on Investment and management of State investment capital in enterprises.

What are the legal loopholes in State enterprise management?

At first, State enterprises were managed under the State enterprise law issued in 1995. The 2005 Law on Enterprise did not have specific regulations on State enterprises. Issues related to State capital management were managed under Government decrees since July 2010. Therefore, the responsibilities of various governing bodies when it came to the use of State capital were unclear.

At the moment, some State enterprises are under Government management while the remainder are managed by ministries and localities. This decentralised administration system lacks transparency, and thus many parties lack responsibility.

Why is there no differentiation between the State's function as an investor in enterprises and the State's function as a regulatory authority?

That is an issue that the law should handle. State property and capital invested in enterprises belongs to the people. At the moment, there is no law for management of State capital invested in enterprises, so the Government is seen as a representative for business.

The Government manages State capital invested in enterprises through member councils and management boards. Wholly State-owned enterprises should be seen as joint-stock companies with one member, the Government. So State enterprises must ask for the Government's approval when it comes to investment in big projects, mergers and acquisitions and dividend distribution.

What problems should the law on investment and management of State investment capital in enterprises tackle?

First, the draft law should have detailed regulations on investment fields for State enterprises. Companies must ask the Government's approval for any business expansion.

Secondly, the law should regulate the relationship between the State as an owner of capital and the State's rights and responsibilities as a governing body.

In addition, forms of enterprises, for example joint-stock or one-member Ltd companies, should be managed under the enterprise law, rather than under regulations of the draft law on investment and management of State investment capital in enterprises.

Can you talk about handling market defects?

There will always be surplus and shortage crises in the market. The Government should be more proactive when it comes to forecasting crises. The motive of enterprises is profit, and they engage in competition so that they can make a profit. But the State should not be trying to make a profit, it should be trying to benefit the people.

The State should invest in fields of public service and in remote areas that no one wants to invest in, focusing on the public benefit. That's why we should fairly differentiate the business and public benefit activities of State enterprises. — VNS


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